KCAP Financial (NASDAQ: KCAP) and BlackRock LT Municipal Advantage Trust (NYSE:BTA) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, dividends, earnings, profitability, valuation and risk.

Dividends

KCAP Financial pays an annual dividend of $0.48 per share and has a dividend yield of 13.8%. BlackRock LT Municipal Advantage Trust does not pay a dividend. KCAP Financial pays out 320.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Valuation and Earnings

This table compares KCAP Financial and BlackRock LT Municipal Advantage Trust’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
KCAP Financial $32.54 million 3.97 $5.55 million $0.15 23.27
BlackRock LT Municipal Advantage Trust N/A N/A N/A N/A N/A

KCAP Financial has higher revenue and earnings than BlackRock LT Municipal Advantage Trust.

Analyst Ratings

This is a summary of recent ratings and price targets for KCAP Financial and BlackRock LT Municipal Advantage Trust, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
KCAP Financial 0 1 1 0 2.50
BlackRock LT Municipal Advantage Trust 2 5 7 0 2.36

KCAP Financial currently has a consensus target price of $9.75, suggesting a potential upside of 179.37%. BlackRock LT Municipal Advantage Trust has a consensus target price of $360.36, suggesting a potential upside of 2,803.76%. Given BlackRock LT Municipal Advantage Trust’s higher possible upside, analysts plainly believe BlackRock LT Municipal Advantage Trust is more favorable than KCAP Financial.

Profitability

This table compares KCAP Financial and BlackRock LT Municipal Advantage Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
KCAP Financial 17.53% 7.44% 3.84%
BlackRock LT Municipal Advantage Trust -45.66% -3.37% -2.00%

Institutional & Insider Ownership

20.2% of KCAP Financial shares are held by institutional investors. 8.0% of KCAP Financial shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

KCAP Financial beats BlackRock LT Municipal Advantage Trust on 8 of the 11 factors compared between the two stocks.

KCAP Financial Company Profile

KCAP Financial, Inc. is an internally managed, non-diversified closed-end investment company. The Company has approximately three principal areas of investments. First, the Company originates, structures and invests in senior secured term loans and mezzanine debt primarily in privately-held middle market companies (the debt securities portfolio). In addition, the Company may invest in the equity securities of privately held middle market companies. Second, the Company invests in asset management companies (the Asset Manager Affiliates) that manage collateralized loan obligation funds (CLO Funds). Third, the Company invests in debt and subordinated securities issued by CLOs (CLO fund securities). These CLO fund securities are primarily managed by its Asset Manager Affiliates, but from time-to-time the Company makes investments in CLO Fund Securities managed by other asset managers. The CLO funds typically invest in syndicated loans, high-yield bonds and other credit instruments.

BlackRock LT Municipal Advantage Trust Company Profile

BlackRock Long-Term Municipal Advantage Trust (the Trust) is a non-diversified, closed-end management investment company. The Trust’s investment objective is to provide current income exempt from regular federal income tax. The Trust seeks to achieve its investment objective by investing, under normal market conditions, at least 80% of its assets in municipal obligations and derivative instruments with exposure to such municipal obligations, in each case that are exempt from federal income tax (except that the interest may be subject to the federal alternative minimum tax). The Trust invests primarily in long-term municipal bonds with a maturity of more than 10 years at the time of investment. The Trust’s municipal bond portfolio will have a dollar-weighted average maturity of more than 10 years. The Trust may invest directly in such securities or synthetically through the use of derivatives. BlackRock Advisors, LLC is the investment manager of the Trust.

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